Dell Technologies bets big on digital transformation
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When Dell Inc. said it would acquire EMC Corp. for $67 billion last October, analysts were sceptical since both companies primarily sold commoditised products like personal computers (PCs), servers and storage in a world where clients had begun demanding solutions aimed at digital transformation.
On Wednesday, Alok Ohrie, president and MD, India Commercial of Dell EMC, insisted that the combined company, christened Dell Technologies, is now “uniquely positioned” to provide customers with solutions that will secure their digital future with “a single window of engagement”.
The combination creates a $74 billion company with a technology portfolio which includes virtualization company VMware, security firms RSA Systems and SecureWorks, software and services (including cloud and big data analytics) firm Pivotal, and cloud management software company Virtustream.
In an interview, Ohrie said he believes there are three pillars of digital transformation: IT infrastructure transformation, workforce transformation and security transformation. “Effectively, we now play in all the elements of a modern data centre,” he said.
Dell doesn’t break up country-wise revenue, but according to estimates by Dataquest, a Cyber Media (India) Ltd Publication, Dell India’s revenue stood at Rs17,480 crore in FY 2015-16. It pegged EMC India’s revenue in 2014-15 at Rs2,452 crore (combined about Rs20,000 crore, or $3 billion).
Tom Sweet, chief financial officer, Dell Technologies, recently said that the combined revenue of the two companies in India was “closer to $2.5 billion”.
According to International Data Corp. (IDC), in the overall PC shipment for the April-June quarter of 2016, HP Inc. reclaimed its top spot with 28.4% market share, while Dell captured the second spot with 22.2% “backed by focused efforts on growing branded consumer desktop category”.
In the India x86 (Intel-based servers) market, HP maintained its lead position in the October-December quarter of 2015 with 36% market share in terms of unit shipment, followed by Dell with a market share of 24% and Lenovo with 12%. EMC led in India’s external storage industry with a 28.4% market share in the January quarter.
Nevertheless, the fact is that the shift to cloud is transforming and cannibalizing hardware markets, and technology companies, including Dell, Hewlett-Packard Enterprise (HPE), International Business Machines Corp. (IBM), Oracle Corp. and Cisco Systems Inc., need to evolve their strategies in order to survive, according to Forrester analysts.
Ohrie pointed out that Dell Technologies, with 140,000 employees, annual revenue of $74 billion and over 20,000 patents and patent applications, “has over the last few years made significant investments in R&D” that will stand it in good stead.
Dell and EMC have made a cumulative R&D investment of $12.7 billion over the last three years and “we have publicly stated that for this year, $4.5 billion of investment will be made in R&D, which is multiple times what the competition is investing”, Ohrie said.
Going forward, Ohrie said, “we are going to focus on the digital transformation space and help our customers take that journey at a faster pace”.
But what will happen to jobs made redundant by the Dell-EMC merger? On 7 October, Dell Technologies confirmed there would be layoffs following their acquisition of EMC.
Ohrie countered, “Nothing that I know of. India certainly is an investment destination and continues to remain an investment destination.”